How to Refine Your Pitch to Investors
If you’re looking to raise capital, you’ll almost certainly spend time in front of hard-eyed investors who have the power to write you big checks, provided that you and your business come across like winners.
Here are some guidelines for making your pitches more effective and appealing to potential backers.
Keep Your Introduction Short
If it takes you more than a minute to sum up your idea, your abilities, and the strengths of your business plan, you’ll hinder your quest for investment funds. This is because many opportunities to present your full pitch develop only after you give your “elevator speech” during casual conversations about other things.
Hone and vet every single word of your introductory pitch, and then memorize it so thoroughly that you can deliver it without appearing nervous or hurried. This solid, short introduction will help you secure opportunities to pitch your ideas at greater length and depth.
Tell the Whole Story in 30 Minutes or Less
Any investors worth pitching are skilled at understanding, evaluating, and selecting from a large number of investment proposals. They don’t have the time or the patience to let you cover fundamentals en route to what makes your business idea worthwhile. So don’t go there.
Instead, focus on covering the essentials of your business idea (see below) with a dozen or so slides in a presentation that lasts no more than 15 minutes. If you generate enough interest, you could spend the next five to 15 minutes fielding questions. You may get more time, but don’t plan on it.
Pack Your Business Plan With Compelling Facts
Investors often express interest before — but write checks only after — reviewing and investigating your detailed business plan. That’s why it’s sensible to spend weeks, even months, perfecting a compelling, bullet-proof, and sophisticated document.
Your business plan should provide:
- An explanation of the problem your business will address
- The size of the market your business aims to tap
- Realistic projections for your costs and revenues
- Why and how your business can beat its competition
- The value of your business’s “human capital,” including qualifications and experience
Clarify an Investor’s Exit Strategy
You probably love your business and would be content to run it successfully for many years. Your investors, however, may want to turn a large profit in three to five years and move on.
To win potential investors’ hearts, minds, and wallets, you must plan a way for them to cash out, such as through large-scale licensing agreements or a strategic sale. If there’s no way for investors to get out, they’re not going to come in.
Work to Build Relationships vs. Pitch to Strangers
Before investors will write you a check, they must believe in you personally and trust your abilities. So, your investment-seeking efforts are best directed at developing strong, positive relationships with relatively few likely backers.
In fact, many investors prefer to look for opportunities to fund managers or management teams they already have confidence in. Rather than pitch to strangers, work your relatives, social networks, and business relationships to connect with compatible investors.
Let Investors Bring Up Valuation
You’re confident your business will soon be worth a great deal. But if you bring up valuation too early in your relationship with a potential investor, you may undermine your chances of success. The reason is simple: Placing a valuation on businesses is part of the investor’s specialty.
The best relationships with potential investors develop through compatible personalities, shared goals and interests, and other deeper values — not simply to make money. When the investor feels ready to pull the trigger, and not before, he or she will become interested in discussing how much your business is worth.
Learn From Criticism and Rejection
Pitching your business idea is necessarily an act of vulnerability. So there’s a potential to feel hurt, insulted, or worthless when experienced investors challenge everything from your business model to your technology platform — and then decline to invest.
With the right attitude, however, you can use their opinions to shed new light on your thoughts, analysis, and overall business plan.